Former CIBC, UBS managing director targeted by OSC

According to allegations released by OSC staff Thursday, Moore, a former managing director at CIBC World Markets and UBS Securities, is alleged to have traded in securities of two companies, Tomkins Inc. and HOMEQ Corp.

A former managing director at CIBC World Markets and UBS Securities is facing allegations he “was abusive of the capital markets” and “misused confidential information… for his personal profit” when he purchased shares in a company after inadvertently learning about a proposed takeover through an email.

A statement of allegations issued by the Ontario Securities Commission on Thursday concerns Richard Moore, a veteran investment and corporate banker with two decades in the business, and his conduct involving the purchase of stock in two companies that were subsequently taken over.

The allegations have not been proven, and staff of the OSC and Mr. Moore have reached a proposed settlement. The regulator will hold a hearing Tuesday to consider it.

Mr. Moore worked at CIBC in several capacities during his 20 years at the bank, before moving to UBS Securities Canada in 2012.

Two transactions targeted by the OSC involve Mr. Moore’s dealings with the Canada Pension Plan Investment Board and Birch Hill Equity Partners, and are alleged to have taken place in 2010 and 2012.

Aside from Mr. Moore, none of the banks, money managers, or companies involved in the case is alleged to have done anything wrong, and Mr. Moore’s former employers say they have co-operated with the OSC, Canada’s largest capital markets regulator.

In the six-page statement of allegations, the OSC claims Mr. Moore took his largest ever equity position in global engineering and manufacturing group Tomkins plc in the summer 2010 after he deduced it was likely to be acquired by CPPIB.

Mr. Moore made the Tomkins investment of 212,000 shares, valued at £508,249.90, after assessing a number of factors including public sources, the regulator says.

There were rumours the firm would be taken over, but the OSC says he also relied on “his observations of a friend and senior representative of CPPIB (known in the OSC document only as Mr. A) and comments of a general nature made by Mr. A about work he was involved in for CPPIB.”

For instance, the OSC alleges Mr. Moore learned from Mr. A was that CPPIB required US$2-billion in financing involving a company in Europe and the U.S.

The “final piece of information” behind Mr. Moore’s investment in Tomkins, the regulator claims, was a chance meeting between the chief executive of Tomkins and Mr. A at a social event.

“The next day Moore took steps to make the Tomkins investment,” state the allegations.

On July 19, 2010, the day of the announcement by Tomkins of the approach by CPPIB and Onex Corp., the closing price of Tomkins shares increased 31.6% from the previous day’s close.

The allegations make clear that “in no specific instance did Mr. A ever provide Moore with any material, generally undisclosed information.”

But the OSC says Mr. Moore’s conduct “fell below the standard of behaviour expected from someone in Moore’s position and given his extensive experience in the capital markets industry.”

The regulator says Mr. Moore purchased the shares of Tomkins in two brokerage accounts in Jersey, a Channel island, and did not disclose the offshore accounts to CIBC “as required by its compliance policies.”

The allegations concerning a second company that was taken over shortly after Mr. Moore is alleged to have taken a position are potentially more serious because he is alleged to have made his investment after receiving material information — albeit inadvertently — from Birch Hill.

OSC staff allege that Mr. Moore invested in HOMEQ Corp. after receiving an email that was not intended for him from a partner at Birch Hill, identified in the regulatory filing as “Mr. B.”

According to the OSC, the email contained “material information,” namely that Birch Hill was victorious in an auction and would be able to purchase the mortgage company for $9.50 a share.

“Instead of returning the email and advising Mr. B. that he had received the email in error, Moore took steps to purchase securities of HOMEQ,” the allegations state.

Staff of the regulator allege that Moore paid $244,524.06 to buy HOMEQ shares, which netted him a gross profit of $46.175.

Mr. Moore was “in a special relationship with HOMEQ” and had “knowledge of the Material Fact with respect to HOMEQ that had not been generally disclosed,” the OSC alleges.

Kevin Dove, a spokesperson for CIBC, said Mr. Moore’s alleged trades in Tomkins shares in 2010 “were done without CIBC’s knowledge” and were made using an account outside the bank.

“He did not comply with CIBC policies requiring disclosure of accounts outside of CIBC and obtaining CIBC approval before executing trades,” Mr. Dove said in an email, noting that Mr. Moore “held no management responsibilities with CIBC and had no staff.”

Karina Byrne, a spokesperson for UBS, said Mr. Moore is no longer working at the bank, and added that the trades at issue in the OSC statement of allegations were done “without UBS’s knowledge.”